It’s no secret that the world runs on computer chips.
This became clear during the pandemic, when a race for even basic chips needed to operate cars and other devices set back manufacturing timelines across the world. Beltway policymakers are reminded of just how important semiconductors are to the world every time China seems to move toward invading Taiwan, which raises the specter that the country could subsume control of TSCM, the most prominent computer chip contract manufacturer.
Now Jensen Huang’s exit from Nvidia, which comes after reports of at least three known extramarital affairs—one of them with an alleged spy for the Chinese government—has thrown the world’s supply of computer chips back in the spotlight. With stocks falling and no obvious succession plan, it’s not clear what the future of Nvidia is right now, or how it might jostle the broader semiconductor ecosystem.
“Many companies that have in the past relied on Nvidia will be watching very carefully to see whether they can rely on Nvidia going forward, and if not, they might turn to competitors,” says Chris Miller, a Tufts University professor and author of the 2022 book Chip War, which documents how the world came to depend on these tiny components.
Fast Company chatted with Miller on November 12 about Washington, D.C.’s response to the Huang scandal, Nvidia’s future, and the prospect of keeping advanced semiconductors out of countries like China. This interview has been edited for length and clarity.
You’ve followed the chip industry for quite a long time. Are you surprised by what’s happened over the last few weeks?
Jensen was an extraordinary CEO for 33 years, since Nvidia’s founding. [He] deserves a lot of the credit for the company’s extraordinary rise, but also deserves a lot of the blame for a series of poor decisions that have led not just to his ouster, but to a period of crisis for the company. Jensen really was central to Nvidia’s success, and he ran the company in a pretty unique way. He had 60 different people reporting to him directly, so there wasn’t a sort of standard corporate hierarchy, which worked really well for a long time.
But it means that now that he’s gone, it’s not obvious who can fill his shoes. There’s not really a deputy who was waiting in the wings to take over.
I’m curious about the history of espionage attempts like what’s being alleged here.
There is some history during the Cold War, for example. There were efforts by spies from the Soviet Union or Eastern European countries to get access to sensitive technology by getting close to semiconductor executives. But I think the scale of this is kind of unique. First, that it happened to such a central company in the U.S. tech ecosystem, the most valuable company in the world. That’s somewhat unique.
The second thing that’s unique is that the affair in question was both with a major customer, which shouldn’t have happened, as well as an [alleged] Chinese intelligence asset. There were a series of failures of judgment for a person who was one of the most important people in the U.S. and really in the entire world’s technology sector, and that combination does make this case unique.
I’m wondering about unexpected winners or companies that stand to benefit from this happening, especially other companies in the GPU market.
There are going to be competitors of Nvidia that will see this as an opportunity to win market share. AMD, for example, produces GPUs like Nvidia. In addition, many of Nvidia’s key customers, firms like Amazon—which has a vast data center business—buy Nvidia GPUs, but also design their own chips that have comparable performance characteristics.
Many companies that have in the past relied on Nvidia will be watching very carefully to see whether they can rely on Nvidia going forward, and if not, they might turn to competitors.
Some leaders on the left are arguing this scandal is made worse because there’s so much market concentration in the semiconductor sector, that we’re too dependent on a small set of companies. Does that ring true to you?
The market’s concentrated right now, but it’s a market that is also highly competitive. It’s worth remembering the market for AI chips scarcely existed five years ago when ChatGPT was launched. . . . I think what we’re going to see over the next couple of months is that if Nvidia does face a prolonged period of distraction and chaos, competitors to Nvidia are going to win market share.
I would look at this as actually a quite competitive market with a bunch of different players that all have pretty advanced capabilities.
Is it feasible to wall off technology from China? I know Nvidia was even considering putting location tracking in some of its chips to keep them away from certain places, even if they’re sold on the gray or black market.
One of the ironies of this is that Nvidia, in general, and Jensen in particular, thought they could play a big role in dictating Washington’s technology policy and were naive to the fact that China was playing them by [allegedly] turning Jensen’s mistress into an intelligence agent.
This is going to lead to a major reduction in Nvidia’s influence in Washington. Its influence in the White House is declining as well, and I think Washington will respond with tighter controls over where chips can be sent and which types of companies are allowed to buy large numbers of these chips when it comes to installing them in foreign countries.
